UAL Plans Continued Pension Funding

November 21, 2003 (PLANSPONSOR.com) - UAL Corp, the
parent company of United Airlines, plans to continue funding
its pension obligations, not wanting to shift that burden to
the Pension Benefit Guaranty Corporation (PBGC).

The announcement by UAL follows media reports that the
company planned to ask the Internal Revenue Service (IRS)
for waivers so it can postpone about $2 billion in
accelerated payments to its employee pension plans.
If granted, the waivers would postpone the required
contributions over five years from the year they were
originally due and require the PBGC to take a risk on UAL’s
pension plan, according to a Dow Jones report.

Last month, UAL said the four pension plans for its US
workers went from being almost 100% funded in January 2002
to being only 70% funded in January of this year because of
low interest rates and poor investment returns.
Under current law, that shortfall requires UAL to make
accelerated payments in the next few years. The company
estimated earlier this year that it would have to make $4.2
billion in pension contributions through 2008.

Once the accelerated schedule was divulged, UAL said if
the IRS does not grant the waiver, or the company did not
receive legislative relief, it would consider terminating
one or more of the pension plans. Any terminated plan would
be assumed by the nation’s private pension insurer, the
PBGC, with a much lower payout to plan participants.

However, UAL issued a press release earlier this week
stating the company would be able to fund its pension
obligations on the standard, non-accelerated timetable, but
it has an “issue” with the accelerated pension funding
schedule currently mandated.
“United, along with many other companies, supports
the efforts in Congress to modify this accelerated timeline
and smooth out pension contributions in the short term,”
said Chief Financial Officer Jack Brace in the release. “We
are emphatically not seeking government aid or asking the
government to take over our obligations.”